Correlation Between Aqr Long-short and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Diamond Hill at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aqr Long-short and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Long Short Equity and Diamond Hill Long Short, you can compare the effects of market volatilities on Aqr Long-short and Diamond Hill and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aqr Long-short with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Diamond Hill.
Diversification Opportunities for Aqr Long-short and Diamond Hill
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aqr and Diamond is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Diamond Hill Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Long and Aqr Long-short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aqr Long Short Equity are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Long has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Diamond Hill go up and down completely randomly.
Pair Corralation between Aqr Long-short and Diamond Hill
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 1.0 times more return on investment than Diamond Hill. However, Aqr Long-short is 1.0 times more volatile than Diamond Hill Long Short. It trades about 0.21 of its potential returns per unit of risk. Diamond Hill Long Short is currently generating about 0.07 per unit of risk. If you would invest 1,405 in Aqr Long Short Equity on August 28, 2024 and sell it today you would earn a total of 302.00 from holding Aqr Long Short Equity or generate 21.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Diamond Hill Long Short
Performance |
| Timeline |
| Aqr Long Short |
| Diamond Hill Long |
Aqr Long-short and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Diamond Hill
The main advantage of trading using opposite Aqr Long-short and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Diamond Hill can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Aqr Long-short vs. Prudential Real Estate | Aqr Long-short vs. Dunham Real Estate | Aqr Long-short vs. Jhancock Real Estate | Aqr Long-short vs. Columbia Real Estate |
| Diamond Hill vs. Hartford Healthcare Hls | Diamond Hill vs. Fidelity Advisor Health | Diamond Hill vs. Invesco Global Health | Diamond Hill vs. Lord Abbett Health |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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